Walking into a toy store used to be an event. You remember the smell? That specific mix of new plastic, cardboard, and floor wax. For decades, Toys "R" Us was the undisputed king of that experience. Then, the 2017 bankruptcy happened. It felt like the end of an era, honestly. People were mourning Geoffrey the Giraffe like a lost relative. But here we are in 2026, and the question will Toys R Us go out of business is still being asked, though for entirely different reasons than before.
The short answer? They already did. And then they didn't.
It’s complicated. Most people don't realize that the "new" Toys "R" Us isn't the same company that went belly up years ago. When the original giant collapsed under the weight of $5 billion in debt—mostly thanks to a leveraged buyout by Bain Capital and KKR—it looked like curtains. But brands with that much nostalgia rarely stay dead. Today, the brand is owned by WHP Global, and they’ve been playing a very different game. Instead of massive, standalone warehouses that are expensive to heat and staff, they’ve pivoted to a "store-within-a-store" model. You’ve probably seen them inside Macy’s.
The Macy’s Life Raft and Why It Works
WHP Global took a huge gamble by partnering with Macy’s. Basically, they realized that the overhead of maintaining thousands of massive parking lots and HVAC systems was what killed the first iteration. By opening 451 "shops" inside Macy’s locations across the U.S., they managed to resurrect the brand without the soul-crushing real estate costs. It’s clever.
It’s also a bit weird for the consumer. You go in for a suit or a dress, and suddenly you're looking at LEGO sets. But the numbers don't lie. During the holiday seasons of the early 2020s, toy sales were a bright spot for Macy’s. This partnership is the primary reason the brand is still breathing. If you're asking will Toys R Us go out of business again, you really have to look at the health of the retail partners they lean on. If Macy’s struggles, Geoffrey has a problem.
Debt, Private Equity, and the Ghost of 2017
We have to talk about why they failed the first time to understand if they’ll fail again. It wasn't just Amazon. That’s a common myth. Sure, e-commerce hurt, but the real killer was the debt. When the private equity firms bought Toys "R" Us in 2005, they loaded the company with billions in interest payments. Imagine trying to run a marathon while carrying a backpack full of lead bricks. That was Toys "R" Us for twelve years.
They couldn't innovate because every cent of profit went to paying off the interest. They couldn't fix the website. They couldn't clean the floors.
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WHP Global is running a much leaner ship. They aren't just a toy seller; they are a brand licensor. They make money by letting other people use the name. This makes them way more resilient to market dips. They've also expanded into airports. Have you seen the one in Dallas Fort Worth (DFW)? It’s small, high-margin, and targets bored parents with credit cards. That is a sustainable business model.
The "Mall of America" Strategy
Then there are the "flagships." You can’t have a toy brand without at least one giant, over-the-top store. The location at the American Dream Mall in New Jersey is the blueprint. It’s two stories, 20,000 square feet, and has a cafe and an ice cream parlor. It’s an "experience."
Retail experts like those at GlobalData Retail often point out that "experiential retail" is the only way to beat the internet. You can't "experience" an Amazon listing. You can't ride a slide on a website. Toys "R" Us is betting that parents will pay a premium and make a trip for the memories, even if they can get the same Barbie doll $2 cheaper online.
Is the Brand Actually Safe?
The toy industry is notoriously volatile. Birth rates are declining in the U.S., which is a long-term headwind for anyone selling rattles and action figures. Plus, kids are getting into "digital play" much earlier. Roblox is a bigger competitor to Toys "R" Us than Walmart is.
But there’s a secret weapon: Kidults.
Yeah, it sounds silly, but adults buying toys for themselves—think high-end LEGO sets, Star Wars collectibles, and nostalgic figurines—now account for a massive chunk of the market. According to data from the NPD Group (now Circana), "kidults" are the most significant driver of growth in the industry. Toys "R" Us is leaning hard into this. Their new store layouts often feature sections specifically designed for older collectors who have disposable income.
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So, back to the burning question: will Toys R Us go out of business in the near future?
Highly unlikely.
Not in the way they did before. Because they don't own the massive debts or the crumbling buildings anymore, they are much harder to kill. They’ve become a "zombie brand," but in a good way. They exist as a layer of marketing and curated selection inside other stores. If the current owners manage the licensing correctly and don't overextend by opening too many standalone stores, Geoffrey should be around for a long time.
What to Watch Out For
If you're tracking the health of the brand, keep an eye on these specific red flags:
- Macy’s Store Closures: If Macy’s starts shuttering the locations that house Toys "R" Us shops, the brand loses its physical footprint instantly.
- Inventory Lag: If you walk into a store and see empty shelves or old stock from two years ago, that’s a sign of credit issues with suppliers like Hasbro and Mattel.
- WHP Global’s Debt: Watch the parent company. If they start taking on massive loans to acquire other failing brands, the "lead brick" scenario could repeat.
The landscape of retail has shifted so much that "going out of business" doesn't mean what it used to. Brands don't die; they just get sold, sliced up, and put on a different shelf. Toys "R" Us is currently in its "renaissance" phase. It’s smaller, smarter, and much more aware of its own limitations.
Actionable Insights for Fans and Investors
If you're a fan of the brand or just someone watching the retail space, there are a few things you can do to navigate this new era of toy shopping.
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First, don't expect the 1990s experience. If you go to a Macy's location expecting a 50,000-square-foot wonderland, you’ll be disappointed. Check the store directory online first to see if it's a "Flagship" or a "Shop-in-Shop."
Second, utilize their loyalty programs. The new iteration of the brand is heavily focused on data. Joining the "Geoffrey’s Birthday Club" isn't just for the free gift anymore; it’s where they send the most aggressive coupons to compete with Amazon's pricing.
Lastly, keep an eye on the "New Arrivals" section for collectibles. The brand is pivoting toward limited-edition releases to draw in the collector crowd. If you're looking for investment-grade toys, these specific locations often get stock that general retailers like Target might miss.
The brand isn't going anywhere because it has something Amazon will never have: a mascot we actually like and a song we can't get out of our heads. As long as nostalgia sells, Toys "R" Us has a seat at the table.
Next Steps for Navigating the New Toys "R" Us:
- Verify the Location Type: Before making a trip, use the store locator on the official website to distinguish between a small Macy’s kiosk and a full-scale experience center.
- Compare "Kidult" Pricing: For high-end collectibles, check the Toys "R" Us exclusive labels, as they often partner with manufacturers for unique colorways that hold better resale value.
- Monitor Macy's Earnings: If you are looking at this from a business perspective, the quarterly reports from Macy's (symbol: M) provide the most transparent data on how the toy segments are actually performing.